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Cronyism, Corporatism, and Cancellations: The Three Cs of ObamaCare's Unintended Consequences

Question: What do you get when you pass a law consisting of thousands of pages of regulations too numerous and complex to be understood by anyone? Answer: Unintended consequences.

A new study from S&P Capital IQ reveals the extent to which this is the case with the Affordable Care Act. The study finds that, by taking advantages of incentives built into the law - albeit more by accident than design - big corporations can save up to $800 billion dollars by dropping low-wage workers from their health insurance plans and forcing them onto the ObamaCare exchanges.

The problems with this are legion, as is the hypocrisy with which the law’s supporters defend policies that result in the exact opposite of what they claim to want. Democrats in the Senate recently voted (unsuccessfully) to raise the federal minimum wage to $10.10 an hour, citing concerns over the well-being of low-wage workers and demanding a “living wage.” But employer-sponsored health care originated as a substitute for wage increases (prohibited due to FDR’s wage controls.) Now that workers will be losing this perk, they will effectively experience a de facto wage decrease as a result of ObamaCare.

It is also ironic that the ACA has proven so beneficial to corporate giants when the Obama administration has spent the last five years relentlessly attacking the wealthy and powerful in word, if not in deed. In fact, the $800 billion big companies stand to save by foisting their employees’ health insurance off on the government is peanuts compared to Obama’s other accumulated corporate welfare programs, including the stimulus package, multiple Farm Bills, and the bailout of U.S. auto companies. The cronyist overtones in everything the president has done are plain to see for anyone who takes the time to look.

By now, Obama’s claim that “if you like your health insurance plan, you can keep it” has been well and truly debunked, with fact-checking organization Politifact naming it the “lie of the year” for 2013, but the fact that the cancellations keep on coming does nothing to help the president’s credibility.

But perhaps the greatest cause for concern is the seemingly systematic way that Americans are being shifted into government dependence. While the employer-sponsored model for health insurance is grossly flawed, and should never have come into being in the first place, at least it provided a way for workers to obtain health care without running to the government for help. Now, thanks to the ACA, even hard-working employees in low-wage jobs will find themselves forced into federal- or state-run exchanges or else pay a penalty for failing to do so.

When the poor have no recourse but to rely on government entitlements for basic necessities, they are trapped into an endless cycle of dependence, forced to vote to perpetuate the very system that keeps them down. Once a majority of Americans need Big Government just to keep their heads above water, the progressives know all too well that they will never lose another election. This is why it is so important to emphasize that these policies actually hurt the people they purport to help.

Let’s review, shall we? The left claims to want higher wages for the poor while praising a law that effectively lowers wages; the left claims to oppose handouts to big corporations while praising a law that effectively hands them $800 billion; Obama claimed that people would be able to keep their existing health care while pushing a law that does the exact opposite.

If you want to know what progressives really stand for, it is always better to look at what they do instead of listening to what they say. The gulf between the two makes the Grand Canyon look positively quaint.

Stonex2 , money is always a part of the political process even if you are a candidate for one of the socialist parties. But you'd be incorrect if you thought that the tea party's power comes from it's coffers. The tea party could not exist without millions of ordinary citizens. It's power has come from it's numbers and not from it's ability to "buy off" anyone. In other words, what the tea party offers a candidate is votes- a chance to win- and not money to make commercials and signs the way a corporate special interest group does. Even if you don't agree with the Tea Party, it's important to note, that if there is ever going to be any kind of real reform it will have to happen the way the Tea Party did it. A movement involving so many citizens that they can not be ignored. And politicians attaining and retaining power based upon how they serve the ideological interests of the people they are supposed to represent. I wish the democrats could put their differences in opinions aside long enough to realize that what the tea party did is exactly what the founders hoped their citizenry would do. Think of what it would take to have the country changed exactly the way you would like it be. The "stone stone" party may have many different types of members of various income levels and vocations but what will really matter is how much impact it will have in the voting booth. This is much different than the "Corporatism" which is a back room deal between a politician and a monied interest. "Corporatism" is corruption because it excludes the ordinary citizen.

Ever since Republicans took the majority in the Senate, the use of budget reconciliation to put a repeal of ObamaCare on the president’s desk has been a juicy apple hanging just out of reach. A budget reconciliation bill, unlike an ordinary bill, only requires 51 votes to pass, meaning a simple majority of Republicans should theoretically be able to pass it without going to Democrats for help.

Advocates of government intervention in markets usually frame the debate as a binary choice: “We need government to run things so the evil corporations don’t!” It’s an effective tactic, because most people have an inherent distrust of big business, and like the idea of a less money-grubbing alternative. Most of the time, Republicans they foolishly play into the narrative, arguing that given the choice between corporate masters or government ones, we should choose the former. Unsurprisingly, few people are convinced by this, and they shouldn’t be. The whole debate is based on a false dilemma that doesn’t exist. The discussion should not be about choosing our rulers, it should be about choosing whether to be ruled in the first place. As the 19th century individualist Lysander Spooner said, “a man is no less a slave because he is allowed to choose a new master once in a term of years.”

Following the news the UnitedHealth Group, the largest insurance company in the United States, is scaling back its ObamaCare marketing and considering withdrawing from the exchanges, FreedomWorks CEO Adam Brandon commented:

The irreparable structural flaws of ObamaCare are being revealed at a frightening pace. 12 of the state insurance co-ops have failed, insurance premiums just keep rising, enrollment is predicted to be flat, the majority of newly insured Americans have actually just been shoved into Medicaid, and the insurance companies are asking for billions of dollars in taxpayer bailouts to forestall even steeper price hikes. ObamaCare is dismantling and destabilizing the entire infrastructure of our health care system, and it’s hurting real people.

The House of Representatives’ ObamaCare reconciliation bill doesn’t go far enough. The Senate now has the opportunity to improve upon it by sending legislation that fully repeals ObamaCare to the president’s desk. Unfortunately, some Senate Republicans are content to go along with the House’s timid piecemeal approach.

Last week, I wrote about how insurance companies are receiving only a fraction of the money they asked for to compensate them for losses under the Affordable Care Act, and how this was a consequence of structural weaknesses in the design of the law. Now, analysts from ratings firm Standard and Poor's are saying that the risk corridor fund charged with providing this money is nearly exhausted, and that congressional action will likely be required to refill it sometime next year.

Ever since home brewing was legalized in the late 1970s, the craft beer industry has become one of America's most vibrant examples of entrepreneurship and small business. It doesn't take much more than some barley, some hops, and a dream to start your own private microbrewery, and if you're good at it, you could become a nationally recognized brand.

An old rhetorical question asks: "If social Security is such a great deal, why is it mandatory?" A topically apt paraphrase of this would be: "if ObamaCare is so good for health care, why is the president still struggling to sell it five years after it became law?" What does it say about a policy that people refuse to take advantage of - and I use the word "advantage" very loosely - without significant arm twisting? Even though it has been made flat out illegal not to purchase health insurance, millions of people are still staying far, far away from ObamaCare's insurance exchanges, because they know that the legal penalty will actually be less painful than participating in the government-controlled health insurance market.

It's always a good idea to look at the incentive structure behind any public policy. Analyzing how people are induced to behave, and the consequences of those behaviors, is a pretty good indication of whether a plan will succeed or fail. ObamaCare is too vast an example to take all at once, but new information sheds light on a particular piece of the health care law is contributing to the skyrocketing price of insurance.